The deal is expected to be funded with cash on hand, and to close in the second half of Avago's FY15 (ends Nov. 1). It's expected to be immediately accretive.

Avago is less than a year removed from buying LSI, whose product line includes RAID storage controllers, storage adapter cards, hard drive SoCs, and network processors. Much of Emulex's product line, which includes Fibre Channel and Ethernet adapter cards, Ethernet and storage controllers, and network monitoring hardware, is complementary to LSI's and/or services the same hardware OEMs.

Avago is up 5.3% AH to $118.64 following the acquisition news, its FQ1 EPS beat, and strong FQ2 revenue guidance. Emulex is up 24.8% to $7.94. Emulex archrival QLogic (NASDAQ:QLGC) is up 4% to $15.16.

Starboard, which disclosed a position in Emulex (ELX+5.2%) in July, has issued a letter criticizing the storage adapter card/switch vendor's recent performance, arguing shares are undervalued due to "poor capital allocation decisions," and calling for a board shakeup.

The firm asserts Emulex's core Fibre Channel adapter card (HBA) business remains "a valuable asset that will continue to generate strong cash flow for years to come," thanks in part to the duopoly Emulex has in this space in tandem with QLogic (QLGC+1.1%). Starboard is also a fan of Emulex's 10-gig Ethernet and Fibre Channel over Ethernet hardware ops.

Emulex (ELX+14.6%) soars after Bloomberg reports the company has hired Goldman to help find a buyer. Activist investors Elliott Associates and Atlai Capital have been prodding the storage adapter card/switch vendor to sell itself. Archrival QLogic (QLGC+4.7%) has also jumped on the report. Both companies have been struggling to cope with weak server demand.

QLogic (QLGC-0.1%) is selling its InfiniBand adapter card and switch business to Intel (INTC) for $125M in cash. The move allows QLogic to focus on its core Fibre Channel and FCoE storage networking businesses, and is the latest in a series of moves made by Intel to bolster its networking offerings (previously). InfiniBand chipmaker Mellanox (MLNX-5.4%) is selling off on the news.